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Production Subcontracting – External Processing

This scope item demonstrates the option to execute an operation externally within a production order. This type of processing is particularly important as it provides a company with a feasible alternative to in-house processing if capacity bottlenecks occur. During the manufacturing process, when a planned order for production is converted to a production order, the system checks if any routing or work center operations require external processing. When the order is processed and the operation to be handled externally is reached, the system creates a purchase requisition. After generating a purchase order for the operation, the production step is processed by the external subcontractor. The external service is captured with a goods receipt posting. The process is finalized by receiving the subcontractor’s invoice for the service and posting the payment accordingly.

Key Process Steps Covered

  • Create production order with subcontract operation
  • Create purchase order for external processing of services
  • Post goods receipt for subcontracted services
  • Enter incoming vendor invoice and process payment

Benefits

  • Certain operations of the production order can be specified for execution by an external subcontractor
  • In the case of capacity bottlenecks, the assembly procedure of the finished product can be assigned to a subcontractor


Where is Production Subcontracting – External Processing(BJK) being used?

This Scope item is used in the following way:

  • As a core function of Production Operations within Manufacturing Scope Item Group

Process flow of Production Subcontracting – External Processing (BJK)

Find below the process flow of the scope item Production Subcontracting – External Processing as it is defined for release S4H-OP-2009.

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Ref: Manufacturing of S4H-OP-2009


Best Practices related to S/4HANA

*1) Yearly Updates are released per September of each year
*2) The Quarterly updates are released per Februari, May, August and November
Details of future releases can be found in the SAP Roadmap section of each product. Go to SAP Roadmap Product Finder.


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